What would you invest in?

[kyra's mommy]

If you could or would invest in this recession, at this crazy time... what would you invest in? Would you jump into real estate, health care stocks, private businesses, mutual funds, gold or silver, etc.

Just wondering...

 

[TammyAlphabet]

If you could or would invest in this recession, at this crazy time... what would you invest in? Would you jump into real estate, health care stocks, private businesses, mutual funds, gold or silver, etc.

Just wondering...

Definitely mutual funds for the long haul. I don't do short term investing so I don't know. Now is not the time to buy gold or silver in my opinion because the price is so high. Investing in just one class of stock like just real estate or health care or whatever is risky. Remember the tech stock boom in the early 2000's and the tech stock bust? Diversification is the key. If you your house is not paid off, I would start there, then diversify. Mutual funds make diversification easy.

 

[kyra's mommy]

What about the loss of your tax breaks if you pay off your house plus the dollar cost average of buying low and continuing to invest? I love the idea of owning my house with no bank note but my husband is dead set against that so I'm curious what your thoughts are.

Thanks!

 

[DawnM]

YOu have to do the math on that. Are you paying $10,000 in interest to get $1,000 back in taxes? If so, it isn't beneficial to keep a mortgage just for the tax benefits.

You also have to take a look at your standard deduction. I don't know how many you can claim as dependents, but for us, it is pretty high.

Here is an article that can explain it better than I can.

http://www.getrichslowly.org/blog/2...t-keep-a-mortgage-just-for-the-tax-deduction/

Dawn

What about the loss of your tax breaks if you pay off your house plus the dollar cost average of buying low and continuing to invest? I love the idea of owning my house with no bank note but my husband is dead set against that so I'm curious what your thoughts are.

Thanks!

 

[mikehn]

What about the loss of your tax breaks if you pay off your house plus the dollar cost average of buying low and continuing to invest? I love the idea of owning my house with no bank note but my husband is dead set against that so I'm curious what your thoughts are.

Thanks!

It all depends on the interest rate of your existing mortgage. If you have a low rate loan, I would just hold on to the mortgage and continue making payments. Of course you are paying interest, but paying interest on a cheap loan is a good thing. Even better if you are already half way through the mortgage. There is also a cash flow consideration that I will leave for someone else to explain.

 

[BridgetBordeaux]

Rules of thumb include: paying off credit cards and vehicles first, maxing out your 401k or Roth next. If you have done those sorts of thing first, then you can consider investments for the future. The first question that should be answered.................how long can the money stay invested before you need it? The answer will impact how you choose to invest it.

Low cost mutual funds will generally be your best bet with some sort of balance between the stock and bond holdings. You can go to a site like clarkhoward.com to read articles about investing and figure out what is best for you.

BTW..........real estate, precious metals, and private business investments are something that mostly advanced investors dabble in.

 

[kyra's mommy]

We have invested for several years in mutual funds, and our 401ks are maxed, we invest in 529's for our kids, we have one car financed at 3%. This is a large amount of saved money we have moved into a self directed IRA. We could liquidate, pay the penalty and pay off our house but we are only financed at 5% so as much as I love the idea of doing so it may not be our best option. I guess I am asking for more experienced suggestions since we have done the basics all our life. The question really is what to invest in and if we actually have the nerve.

We are in our late 30's so we still have a little while before we need the money.

I just remember studying the great depression when I was in high school and thinking, geez if they had just bought some stock, etc. they'd been rich eventually. Naive I know, but it does make me think if we are missing the second best opportunity to arise in the last 100 years.

 

[kyra's mommy]

BTW..........real estate, precious metals, and private business investments are something that mostly advanced investors dabble in.

Hmm, the more I think about your statement, the more right I think you are. This just might not be for me. Plus, I think you need giant balls of steel and currently I'm rolling ballless ( haha not a word, I know ).

 

[Mom2Ben02]

I wish I had the money to swoop up physical real estate that is going for a song. Instead, I am investing my pittance in a real estate mutual fund. It is highly volatile, but it isn't much we are able to contribute anyway.

 

[TnTWalter]

INDEX funds. I personally use vanguard for my personal non-retirement and non-college investing.

He wrote a little book called 'the little book of commonsense investing'
http://www.amazon.com/Little-Common...F2/ref=dp_kinw_strp_1?ie=UTF8&m=AG56TWVU5XWC2

highly recommend.

website devoted to people who call themselves 'bogleheads'....you think we are frugal on this board...you should see what they do on that board...they are all about investing investing investing.

http://www.bogleheads.org/forum/viewforum.php?f=1

 

[Princesca]

If I had the spare capital, I would definitely invest in real estate. They're not making any more of it, and people always need a place to live. Plus it's a bargain right now - not as much of a bargain as I believe it COULD be, if all the pending foreclosures actually closed, but a bargain nonetheless.

 

[disneymarie]

What about the loss of your tax breaks if you pay off your house plus the dollar cost average of buying low and continuing to invest? I love the idea of owning my house with no bank note but my husband is dead set against that so I'm curious what your thoughts are.

Thanks!

Used money to pay off the house in early May. So glad I did. We received just as large a tax credit in other ways w/o the payment last year. To see any benefit you would need to be paying mainly on the interest, little to nothing on the principle.

Even with savings of not having a mortgage payment, I won't go near the stock market Way to volitile right now. I had thought about bonds, but not crazy about that right now either. Things are going to be bad a long time before they get better.I was ready to invest with diversified areas just before this happened. Had I done it, I do not think I would be getting the dividens I once thought I would.

I even thought about looking into real estate, but why tie my money up who can afford to rent. It could be a nightmare.Besides at my age I would not live long enough to see the benefit.
Investors showed me the charts in June and said oh, some loss but Aug. Adjustment everything will be fine. Good strong investments.... they have not been in contact since.

 

[cats mom]

The state of the economy definitely makes these kinds of decisions more difficult, yes?

Like several other posters suggested, I think there's money to be made in real estate right now too... but it's not an investment for the faint of heart, or for anyone who needs/wants easy liquidity and isn't willing to hold long term, or for anyone who doesn't do a ton of research before jumping in.

There are markets where real estate is undervalued, but that's not the case everywhere. Sheesh, where I live prices are still so out of line with incomes, rents, historical averages, etc that I won't even buy a principal residence here, much less an investment property. But some people are doing just that. Since prices are down from the nonsensical highs of 2006-ish, they figure real estate must be a good deal now. But unless wages increase almost exponentially, I don't see any way they don't get burned on the deal, but maybe their magical crystal ball is better than my reality based one.

Good luck with your decision.

 

[Mary•Poppins]

INDEX funds. I personally use vanguard for my personal non-retirement and non-college investing.

He wrote a little book called 'the little book of commonsense investing'
http://www.amazon.com/Little-Common...F2/ref=dp_kinw_strp_1?ie=UTF8&m=AG56TWVU5XWC2

highly recommend.

website devoted to people who call themselves 'bogleheads'....you think we are frugal on this board...you should see what they do on that board...they are all about investing investing investing.

http://www.bogleheads.org/forum/viewforum.php?f=1

I second this advice. This forum is ALL about investing (for the long haul). They have recommended many books that I have read that with good research behind them. Two of their books (Boglehead's Guide to Retirement and Boglehead's Guide to Investing) are must reads.

Their main thought is NO ONE can predict what the market will do. Many have tried it (including some of the smartest people in the world) and they can't beat it.

And just a funny story to share about investing ... around 1994, I took a beginners investment class in our local community. The person who taught it was from an investment company. At the time, I was in education and couldn't get over why Apple computers were not popular (this is what most schools were using at the time). They were so much easier to use than PCs. So I asked the teacher what he thought about Apple because I would like to invest in their stock. His answer was .... DON'T BUY IT ... this company is probably going out of business. Then came Steve Jobs .... ** sigh ** I keep telling my boys ... we probably could have paid for your education if I had went with that investment!

 

[kyra's mommy]

Originally I thought we would go the real estate route. However, I heard on the news the other day that the government is considering buying the foreclosures and then renting them. I've never heard of that before and I thought that could change things... in terms of more competition for renters. I haven't fully researched that or even given up on it, it just tapped into my fear of making the wrong decision.

Thanks for the Boglehead advice, the forum and the books. I'm going to order the investing book today.

I appreciate all of your insight and thoughts.

 

[Jeff_G]

Just for clarification Steve Jobs was the founder of Apple, so he had been around since its start in 1976. It was the Ipod and Iphone that reinvigorated Apple in the late 1990s early 2000s. Before that, they did have weak sales and mac was looking like a thing of the past… Just goes to show you how a company can turn things around!